Who needs to file an INC-20A Form?

Form INC-20A

Form INC-20A is a mandatory declaration that must be filed by companies in India, incorporated on or after November 2, 2018, with the Registrar of Companies (RoC). It is a declaration by the directors

✓Declare Commencement of Business:It acts as a formal declaration by the companys directors that the company is ready to begin its business operations. Without filing this form, a company cannot legally commence business activities.

✓Confirm Subscription Money Paid:A key purpose is to confirm that every subscriber to the companys memorandum has paid the full value of the shares they agreed to take. This ensures that the company has received its initial share capital as committed.

✓Prevent Shell Companies and Fraud:By mandating this declaration and requiring proof of paid-up capital (usually through bank statements), Form INC-20A helps prevent the formation and operation of "shell companies" or fraudulent entities that might be incorporated without genuine business intent or financial backing.

✓Enable Borrowing Powers:A company is prohibited from exercising any borrowing powers (e.g., taking loans, issuing debentures) until Form INC-20A is filed and approved by the Registrar of Companies. This ensures financial stability and compliance before a company engages in significant financial transactions.

✓Ensure Legal Compliance:Filing Form INC-20A is a mandatory legal requirement under the Companies Act, 2013. Timely submission ensures that the company adheres to statutory obligations and avoids penalties, which can be substantial (e.g., Rs. 50,000 for the company and Rs. 1,000 per day for defaulting officers, up to Rs. 1 lakh).

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What is Form INC-20A (Declaration of Commencement of Business)?

This form is also known as the Declaration for Commencement of Business. The form must be filed within 180 days of the companys incorporation date.

Form INC-20A, which requires a declaration of commencement of business, helps prevent the creation of shell companies by ensuring that newly incorporated companies with share capital actually begin operating and do not just exist on paper.

Declare Commencement of Business:It acts as a formal declaration by the companys directors that the company is ready to begin its business operations. Without filing this form, a company cannot legally commence business activities.

Confirm Subscription Money Paid:A key purpose is to confirm that every subscriber to the companys memorandum has paid the full value of the shares they agreed to take. This ensures that the company has received its initial share capital as committed.

Prevent Shell Companies and Fraud:By mandating this declaration and requiring proof of paid-up capital (usually through bank statements), Form INC-20A helps prevent the formation and operation of "shell companies" or fraudulent entities that might be incorporated without genuine business intent or financial backing.

Enable Borrowing Powers:A company is prohibited from exercising any borrowing powers (e.g., taking loans, issuing debentures) until Form INC-20A is filed and approved by the Registrar of Companies. This ensures financial stability and compliance before a company engages in significant financial transactions.

Ensure Legal Compliance:Filing Form INC-20A is a mandatory legal requirement under the Companies Act, 2013. Timely submission ensures that the company adheres to statutory obligations and avoids penalties, which can be substantial (e.g., Rs. 50,000 for the company and Rs. 1,000 per day for defaulting officers, up to Rs. 1 lakh).

Enhance Transparency and Credibility:By fulfilling this compliance, a company demonstrates its legitimate existence and financial preparedness to stakeholders, including investors, creditors, and regulatory bodies. This fosters trust and transparency in the corporate ecosystem.

Requirements

Eligibility Criteria

One-Person Companies (OPCs) with share capital:While often seen as a simplified structure,OPCsthat meet the criteria of having share capital and being incorporated after the specified date are also required to file INC-20A.

Section 8 Companies (Non-profit companies) with share capital:Even companies established for charitable or non-profit purposes, if they are incorporated with share capital after November 2, 2018, must file this form.

Producer Companies with share capital:These specialized companies also fall under the ambit of INC-20A if they meet the incorporation date and share capital criteria.

Companies incorporated before November 2, 2018:The requirement for INC-20A was introduced by an amendment ordinance, so companies formed before this date are not subject to this specific filing.

Companies incorporated without share capital:This typically refers to companies limited by guarantee, which do not have a share capital structure. Since the forms primary purpose includes confirming the payment of share value, it does not apply to such entities.

Government companies exempted by special provisions:In some cases, specific government companies might be exempted from certain compliance requirements, including INC-20A, through special provisions or notifications.

Establishes Legal Existence:From this date, the company becomes a distinct legal entity, separate from its founders. It gains the legal capacity to own assets, enter into contracts, and engage in legal proceedings in its name.

Triggers Legal Obligations:It is the precise starting point for all statutory compliance timelines, including tax obligations, annual filings, and other regulatory requirements.

Is Official Record:This pivotal date is prominently displayed on the Certificate of Incorporation, serving as the companys official birth record.

Determines Applicability:Form INC-20A is mandatory only for companies incorporated on or after November 2, 2018. The Date of Incorporation dictates whether a company falls under this specific requirement.

Calculates Filing Deadline:The 180-day deadline for filing Form INC-20A is strictly calculated from the Date of Incorporation. Missing this deadline triggers significant penalties.

Unlocks Business Operations:Crucially, a company cannot legally commence business operations or exercise borrowing powers until Form INC-20A is filed and approved. This restriction is effective from the Date of Incorporation, making timely submission essential for active businesses.

Prevents Penalties & Dissolution:Failure to file INC-20A within the 180-day window from the Date of Incorporation results in substantial penalties for both the company and its directors. Prolonged non-compliance can even lead to the ROC striking off the companys name, effectively dissolving the entity.

Paperwork

Documents Required

✓Purpose:This is the most crucial document. It must clearly show that the entire amount of the subscribed share capital (as stated in the Memorandum of Association) has been deposited into the companys bank account by the subscribers.

✓Details:The statement should cover the period from the date of incorporation up to the date of declaration, explicitly showing the credit entries from all subscribers for their respective share contributions. It is often recommended to show transactions for at least the initial 30-60 days.

✓Purpose:A copy of the Board Resolution passed by the companys directors is required. This resolution formally authorizes a director to sign and file Form INC-20A and confirms that the company has received the subscription money from its shareholders.

✓Details:The resolution should explicitly state the decision to commence business, the confirmation of share capital receipt, and the authorization for the specific director to file the form.

✓Purpose:The form must be digitally signed by a director of the company who is authorized to do so by the Board Resolution.

✓Details:The DSC must be active and registered on the MCA portal for the concerned directorsDIN.

✓Purpose:The DIN of the director signing the form is a mandatory field in Form INC-20A.

✓Purpose:Form INC-20A must be certified by a practicing professional—either a Chartered Accountant (CA), Company Secretary (CS), or Cost Accountant (CMA). Their DSC is required for this certification.

✓Details:The professionals membership number and whether they are an Associate or Fellow member must also be provided.

✓Purpose:The form requires a declaration that the company has filed the verification of its registered office as per Section 12(2) of the Companies Act, 2013 (typically through Form INC-22). While often completed during incorporation, ensure this compliance is met.

✓Details:If there were any changes or this was not fully compliant during incorporation, relevant proofs like a utility bill (not older than 2 months) or a rent agreement might be implicitly required to support the declaration.

✓Purpose:For companies whose objects require registration or approval from specific sectoral regulators (e.g., Reserve Bank of India for NBFCs, SEBI, IRDAI), such approvals must be obtained and attached.

✓Details:This would include a copy of the registration certificate, approval letter, or any other relevant document issued by the respective regulatory body.

✓While not explicitly listed as a mandatory attachment in the official MCA instruction kit for INC-20A, many professionals advise attaching geo-tagged photographs of the companys registered office.

✓Details:These usually include an external view of the building with the company signboard and an internal view of the office, ideally showing at least one director/Key Managerial Personnel (KMP) to substantiate genuine operations.

Step by Step

Registration Process

1. Log in to the MCA Portal

Click the "Attach" button within the form to upload the necessary documents:

2. Download e-Form INC-20A

Click the "Attach" button within the form to upload the necessary documents:

3. Fill in the Form Details

Click the "Attach" button within the form to upload the necessary documents:

4. Attach Required Documents

Click the "Attach" button within the form to upload the necessary documents:

5. Pre-fill and Check Form

6. Affix Digital Signatures

7. Upload the Form

8. Make Payment

Pricing

Fees & Charges

Fee Component	Amount
Where share capital is less than 1,00,000	200
1,00,000 or above but not exceeding 4,99,999	300
5,00,000 or above but not exceeding 24,99,999	400
25,00,000 or above but not exceeding 99,99,999	500
1,00,00,000 or above	600

Benefits

Key Advantages

1. Limited Liability

2. Enhanced Credibility and Trust

3. Easier Access to Funding

4. Potential Tax Benefits

5. Business Continuity and Perpetual Succession

6. Brand Protection

7. Legal Compliance and Governance

8. Access to Government Schemes and Support

9. Employee Benefits

10. Intellectual Property Protection

Common Questions

Frequently Asked Questions

Every company incorporated in India after November 2, 2018, having a share capital, is required to file the INC-20A Form. Companies incorporated before this date or companies limited by guarantee not having a share capital are generally exempt.

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